Update:
Resturant manager apologised to me in writing and in person after I complained to the management. They promise they will train their staff better and hope to see me return. I thanked their response and will continue to eat there. I also changed the one-star to a five-star review on Zomato.
My message to the staff is that "You only work in a shop you know and you can drop the attitude".
The food in question is from their takeaway section. Yes, they have a section dedicated to takeaway food and they are also a proper restaurant.
I have always enjoyed their food and service and have had food from both their eat-in menu and takeaway section multiple times before.
I have always asked the staff if it was okay to just eat the takeaway food in their shop and the staff have always been courteous and said of course and even brought me water.
But not this time. This time I ordered a main dish off the eat-in menu and wandered to the takeaway section to choose something to complement my meal and when I attempted to pay for the chosen item the staff member informed me that I am not allowed to have takeaway food on-premise because they are so cheap. I said I have done this several times but the staff member was firm.
I was a little upset and went back to my seat. What really made the whole situation fascinating was the same staff member, after bringing me food, and said "I just want you to know takeaway food is never allowed and I am surprised you had done that before, can you tell me which staff let you do that?"
I was like, WTF, and ignored him.
Edit:
The takeaway food was not listed on a separate menu but rather in a fridge on which I did not notice there was a takeaway sign.
Can they do this?
Sure. A lot of places have the same set-up of selling both take-away and eat-in, with prices cheaper for take-away orders because they don't incur the table service costs.
They're a private establishment - you don't have ANY kind of right to be there.
Edit: Also, wtf is up with the entitlement mentality these days? One staff member is nice, lets you disregard the rules, and you think you're now entitled to ignore the rules?